In the foreign exchange market, how does a change in the expected future U.S. exchange rate affect the demand for dollars?
What will be an ideal response?
Changes in the expected future exchange rate change the demand for dollars. If the expected future exchange rate falls, the demand for dollars decreases and the demand curve shifts leftward because the expected profit from holding dollars decreases. If the expected future exchange rate rises, the demand for dollars increases and the demand curve shifts rightward because the expected profit from holding dollars increases.
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A rise in the price level brings a ________ in the buying power of money that ________ consumption expenditures and causes the quantity of real GDP demanded to ________
A) fall; decreases; decrease B) fall; increases; increase C) rise; increases; increase D) rise; decreases; decrease E) fall; decreases; increase
When compared to a perfectly competitive market, a single-price monopoly with the same costs produces ________ output and charges ________ price
A) a larger; a lower B) a smaller; a lower C) the same; a higher D) a smaller; a higher E) a smaller; the same